Next week, Federal Reserve officials will gather for a two-day policy meeting that starts on Tuesday, with an interest rate decision expected on Wednesday. Earnings season also enters one of its busiest weeks with big tech companies Microsoft, Meta Platforms, and Google parent Alphabet set to report, along with Visa, Mastercard, Texas Instruments, Coca Cola Company, McDonald’s, Boeing, AT&T, Verizon, Ford Motor Company, Chevron, and ExxonMobil, among others. The advance estimate for second-quarter gross domestic product (GDP) will be released on Thursday, followed by the Personal Consumption Expenditures (PCE) Price Index—the Fed’s preferred inflation gauge—on Friday. We’ll also get the latest updates on home prices, along with new and pending home sales for June.
Big Tech Earnings
Next week will be among the busiest of the earnings season, and the spotlight will fall on big tech companies. Microsoft and Google parent Alphabet will report their earnings on Tuesday, and Meta Platforms will follow on Wednesday. Other widely held companies scheduled to report include Visa, Mastercard, Texas Instruments, The Coca Cola Company, McDonald’s, Boeing, AT&T, Verizon, Ford Motor Company, Chevron, and ExxonMobil, among many others.
July FOMC Meeting
On Tuesday, Federal Reserve policymakers will gather for the two-day meeting of the Federal Open Market Committee (FOMC), with an interest rate decision and press conference featuring Chair Jerome Powell scheduled for Wednesday. A majority of traders expect the Fed will hike interest rates by 25 basis points (bps), according to CME Group’s FedWatch Tool, in what will likely be the 11th and final rate hike of the current tightening cycle.1 The Fed has raised its benchmark federal funds rate by 500 bps since March of last year, in an effort to tame the highest inflation in over four decades. A 25-bp hike would set the fed funds rate in a range between 5.25% and 5.5%, the highest in 22 years.
Second Quarter GDP Figures
On Thursday, the Bureau of Economic Analysis (BEA) will issue the advance estimate for second-quarter gross domestic product (GDP). The U.S. economy likely expanded 1.1% in the second quarter, the Conference Board forecasts, exceeding initial projections of 0.6% growth.2 Looking ahead, while growth could slow substantially in the second half of 2023, a strong labor market and slowing inflation mean that the U.S. economy will likely avoid a recession, according to Deloitte.3
The Fed’s Preferred Inflation Gauge
On Friday, the BEA will release the Personal Consumption Expenditures (PCE) Price Index—the Fed’s preferred inflation gauge—for June. Prices are projected to have risen 0.1% last month, at the same pace as May. Price gains likely decelerated sharply to an annual rate of 2.9% from 3.8% in May, edging closer to the Fed’s 2% target. Core prices, which exclude volatile food and energy costs, likely rose 0.2% from May, and 4.3% from a year earlier. The PCE Price Index is the Fed’s preferred inflation gauge as it more closely tracks consumers’ spending decisions than the Consumer Price Index (CPI), while the basket of goods comprising the index is updated more frequently.